What percentage is apportioned to the "last mile"?

[TheDoc]

I am mainly a customer of the 'last mile' service (i.e. the postie at my door) for received mail.

I have noticed recently that a lot of the mail is 'franked' with UK Mail or TNT as the carrier. What percentage of the overall cost of business postage does Royal Mail get for delivery to the customer's door? Surely, this 'last mile' service ought to be separated as an autonomous business in its own right. Royal Mail could then compete on a like for like basis back at the front end which, I presume, starts at the local sorting office of the businesses which send the mail in bulk?

Another question. I subscribe to Amazon DVD rental. When I send a DVD back in the prepay envelope at a local post box, does Royal Mail get a proportion of the cost for collection of the mail at the postbox now that the main contract is not with Royal Mail?

Thanks in anticipation.

[evilc]

I am mainly a customer of the 'last mile' service (i.e. the postie at my door) for received mail.

I have noticed recently that a lot of the mail is 'franked' with UK Mail or TNT as the carrier. What percentage of the overall cost of business postage does Royal Mail get for delivery to the customer's door? Surely, this 'last mile' service ought to be separated as an autonomous business in its own right. Royal Mail could then compete on a like for like basis back at the front end which, I presume, starts at the local sorting office of the businesses which send the mail in bulk?

Another question. I subscribe to Amazon DVD rental. When I send a DVD back in the prepay envelope at a local post box, does Royal Mail get a proportion of the cost for collection of the mail at the postbox now that the main contract is not with Royal Mail?

Thanks in anticipation.

Not sure about the dvd's but Royal Mail gets roughly 13 pence per letter for being instructed by postcomm to allow tnt/dhl etc downstream access to their sorting machines and their postman for delivering their mail.

[piranha]

Another question. I subscribe to Amazon DVD rental. When I send a DVD back in the prepay envelope at a local post box, does Royal Mail get a proportion of the cost for collection of the mail at the postbox now that the main contract is not with Royal Mail?

RM will get paid from the pre-paid postage charge of sending back the DVD, there is
no extra charges for collection, no competitors have collection services for letters.

[Spedley]

I don't remember where I got my figures from (perhaps I made them up) but RM get paid 13p per letter and it costs them about 9p to do the final mile. This leaves 4p per letter less tax as profit. I don't know if that also counts returned mail or other expenses. Most of RM's profit was in the collection of mail which is hit hardest by the competition.

That appears to be a load of rubbish. The only reference I can find from an unreliable source says RM is paid 13p and it costs 18p but it would seem very poor business to sign the agreement with those figure.

Slightly off topic but: I'm sure RM's profits have dropped but I also remember that a couple of years ago when we made £500 Million profit, £100 Million of that was said to be parcels from ebay.

[TrueBlueTerrier]

2 points Spedley I have heard we loose on every letter sent by DSA but I don't know how much. I will have to research it a bit when I have time. Also we are VAT exempt so if your figures right we don't pay tax on the 4p.

[Spedley]

Editied my previous post because I couldn't find any evidence for it.

[TrueBlueTerrier]

The only reference I can find from an unreliable source says RM is paid 13p and it costs 18p but it would seem very poor business to sign the agreement with those figure.

Unless of course you wanted to run down the business and then asset strip it or I am just cynical and paranoid.

(A bit of both Teebs)

[plodsie]

If you look up postcon's webshite (oops!) and look at the survey's it gives you an idea. royalmailwholesale.com is the site that will give you the prices we charge for DSA. It is 13.5p according to that.
According to postcon's figures TNT used DSA for 69% of their total mailings last year..... some competition!
RM also delivered 1.2billion DSA as at 31st October 2006!!!!

[kingtubby]

I am mainly a customer of the 'last mile' service (i.e. the postie at my door) for received mail.

I have noticed recently that a lot of the mail is 'franked' with UK Mail or TNT as the carrier. What percentage of the overall cost of business postage does Royal Mail get for delivery to the customer's door? Surely, this 'last mile' service ought to be separated as an autonomous business in its own right. Royal Mail could then compete on a like for like basis back at the front end which, I presume, starts at the local sorting office of the businesses which send the mail in bulk?

Another question. I subscribe to Amazon DVD rental. When I send a DVD back in the prepay envelope at a local post box, does Royal Mail get a proportion of the cost for collection of the mail at the postbox now that the main contract is not with Royal Mail?

Thanks in anticipation.

I think the term 'final mile' is misleading. The percentage of work we do in terms of man-hours far outweighs the payment received per item.
A typical large scale posting will be initially processed by machine and segregated at a mailing house, then dispatched to RM mail centres for inward sortation and sent on to delivery offices. By my reckoning, Royal Mail does at least two thirds of the work involved.
On top of that, a significant proportion of the DSA work received at mail centres that has been marked as machinable, and is therefore eligible for a discounted rate, turns out to be unsuitable for RM sorting machines. i.e. the address is too small/badly printed, the envelopes are all stuck together and so on. The result of this is yet more work to do such as manual sorting, unsticking of items, etc which could have been avoided.
I presume that the DSA agreement will be up for renegotiation at some point, but who ever does it needs to get a better deal for RM.

Regarding the Amazon DVDs. These are still handled by normal first-class post using the entire RM network. RM 'only' lost the 2nd class Amazon contract to Home Delivery Network (I think?) Mind you, based on my experience of them, I wouldn't be suprised if Amazon come back to RM, strikes notwithstanding...

Mart.

[hmtkeren]

TNT are starting to send parcels through our system as well